Additional tax

2013 PTD 1800 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss.34 & 33Additional taxAdjustment of sales tax charged through electricity bills

Revenue pointed out that input tax paid along with electricity bills was adjusted immediately on receipt of the bills whereas the said adjustment could be lawfully claimed only after the payment of the bill and charged additional tax

Taxpayer contended that at the time of filing of returns there was a confusion whether adjustment of input tax was to be made with reference to the date of issuance of electricity bill or the date of payment of bill; and when Federal Board of Revenue had clarified that the adjustment of input tax could be claimed only after making the payment of electricity bill, the adjustment was claimed in accordance with such instructions; and irregular adjustment of input tax before the actual payment of electricity bill was just a procedural and inadvertent lapse which did not attract the penal provisions of law

Validity

Adjustment of input tax made by the taxpayer under misconception of law did not render it liable to additional tax or penalty

Appellate Tribunal directed deletion of additional tax charged on account of irregular adjustment of input tax.

2011 PTD 834 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 205 & 127Additional taxAppealable order

Order under S.205 of the Income Tax Ordinance, 2001 was appealable before the First Appellate Authority even before the insertion of S.205 in subsection (1) to S.127 of the Income Tax Ordinance, 2001 by Finance Act, 2009 and the insertion was clarificatory in nature.

2010 CLC 1117 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Plaintiff filed suit for damages on the ground that he had imported 2999.857 metric tons RBD Palm Oil from "M". under letter of credit by the native bank and paid for said consignment but found the Palm Oil 2982.637 metric tons with short landing of shipment with 17.220 metric tons

Defendants contested suit and repudiated claim of the plaintiff

Trial Court dismissed suit of the plaintiff

Appellate Court on appeal, allowed the same and set aside the judgment and decree of the Trial Court

Plaintiff contended that short landed quantity of Palm Oil was established on record and judgment of the Appellate Court did not call for interference

Validity

Record had proved that short landing of 8.610 metric tons RBD Palm Oil which was established through cogent evidence including documentary evidence

Case of plaintiff was not only proved through their witnesses but the only witness examined by the defendants had also admitted the quantum of short landing

Entire evidence on record had been appreciated in its proper perspective by the Appellate Court and the findings recorded by it were strictly in accordance with law

Appeal was dismissed by High Court.

2010 PTD 1740 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

S.34Additional tax

Charge of additional surcharge is consequential.

2010 PTD 1503 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

S. 205(1B)Additional taxTime period for calculating additional taxReduction of additional taxShort payment of advance tax was admittedAdvance tax was chargeable from 1-4-2007Date of assessment i.e. 30-9-2008 was also undisputedOnly contentious issue was the closing date for calculation of additional tax liability

Taxpayer's assertion was that the "30th day of June of the financial year next following" was 30-6-2007 whereas the department contended that it was 30-6-2008

Additional tax was leviable from 1st April to the date of assessment of relevant tax year or the 30th June of the financial year next following

Financial year of the taxpayer company started from 1-10-2006 to 30-9-2007 and the assessment of the said year was to be made on 30-9-2008 on which the return had to be filed

Taxation Officer was legally correct in calculating the period of default from 1-4-2007 to 30-6-2008 and to levy the additional tax

First Appellate Authority had wrongly reduced the period of default from 1-4-2007 to 30-6-2007 and its order was not sustainable in the eyes of law

Order of First Appellate Authority was vacated and that of the Taxation Officer was restored by the Appellate Tribunal.

2010 PTD 1440 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

Ss. 162 & 161Recovery of tax from the person from whom tax was not collected or deductedFailure to deduct taxAdditional taxRecovery of

Authority could recover additional tax only from the person who failed to deduct' tax at source and not from the assessee/ appellant original amount of tax if not deducted or short deducted could be recovered from taxpayer from whom the tax should have been collected

Withholding agent was bound to pay the additional tax on the difference of the rate 6% and 5% under the law and not the taxpayer

Withholding agent was liable and demand of additional tax if due, could be raised against him and not against the taxpayer

Order passed by both the authorities below were vacated by the Appellate Tribunal up to the extent of levy of additional tax because principal amount, due to difference of rate of tax, had already been paid and additional tax could not be levied against the taxpayer, if it was levied, it could be only against the withholding agent.

2010 PTD 1081 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

S.205Additional taxPenalty and additional taxDistinctionLast deposit of tax deducted/collected

Levy of additional tax rejecting the stance of the company that delay was due to internal controls and administrative procedures

Assessee contended that there was no mala fide intention on the part of the company causing delay in deposit in government treasury of tax deducted, as the company voluntarily deposited the tax so deducted, with the government exchequer soon after completion of administrative procedures

Validity

Additional tax could not be equated with penalty

Penalty and additional tax are distinct ones

Penalty was meant to penalize the assessee for not doing an act within stipulated timeframe while additional tax was levied because assessee used the government money and took its benefit or the government was deprived of its utility/profits

Tax was admittedly due and not paid on due date, it amounted to utilization of public exchequer and compulsion of payment of additional tax was quite in accordance with equity and principles of natural justice

Assessee could not be absolved from payment of additional tax qua late payment of admitted liability of tax on the plea of not being wilful

Appeal was dismissed by Appellate Tribunal.

2009 PLC 5 ISLAMABAD Judicial Precedent

Ss. 46 & 47(3)Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968), S.O.12(3) & 15(4)Termination of serviceGrievance petitionAppeal

Employee whose services were terminated on certain charges of misconduct after issuing him show-cause notice and holding inquiry against him, filed grievance petition, which petition having been dismissed by the Labour Court, employee had filed appeal along with other employees against judgment of the Labour Court

Establishment issued letter to employee narrating entire background of alleged incident and directed employee to appear before the Inquiry Officer

Inquiry Officer issued another notice to employee to take part in the inquiry proceedings and duly provided opportunity of cross-examination to employee

Contention of counsel for employee that neither any charge-sheet/show-cause notice was issued nor any opportunity of hearing was given to the employee, had no force, in circumstances

Counsel for employee had himself produced inquiry report in evidence before the Labour Court and no effort was made to summon the complete record of inquiry report or, Inquiry Officer by the employee

Court below, in circumstances had rightly taken into consideration the inquiry report in evidence

Alleged incident in the premises of the establishment had not been denied and criminal proceedings were also pending in the court

Stand taken by the employee that he had not participated in the said incident occurred in the premises of the establishment, had not been supported by any independent witness on behalf of the employee

Employee had himself admitted in cross-examination that no enmity existed between the witnesses produced by the establishment in inquiry proceedings

Charge-sheet was issued to the employee and consequently an inquiry was conducted on the allegation of misconduct and employee had participated in that inquiry and on the basis of the report of Inquiry Officer the order for termination of service of employee was passed by the establishment

Labour court, in circumstances had properly appreciated the record and passed impugned judgment in accordance with law.

2007 PTD 2289 CUSTOMS,CENTRAL-EXCISE-AND-SALES-TAX-APPELLATE-TRIBUNAL Judicial Precedent

Ss.34(1) & 26S.R.O. 247(I)/2004 dated 5-5-2004Additional taxReduced rate

Contention was that admittedly, rate or additional tax at the relevant time was 2%, but rate of tax having been reduced to 1% subsequently, the assessee was entitled to reduced rate

Validity

Held, there was absolutely no controversy about the levy but the assessee wilfully and on purpose defaulted in payment or' a self-assessed amount of sales tax which had been recovered from the buyers and required to be deposited in government exchequer by due date

Assessee was guilty of withholding illegally the amount of tax collected on behalf of government and, as such it was not entitled to any dispensation

Assessee was liable to pay additional tax at the rate as it existed at the relevant time and it was not authorized to change it on its own. by applying lower rate of tax

Assessee having failed to pay correct amount of tax in accordance with the provisions of S.R.O. 247(I)/2004 dated 5-5-2004, it was not entitled to the amnesty granted thereunder either

Assessee was directed to pay additional tax at the rate of 2% per month as prescribed under S.34(1) of the Sales Tax Act, 1990, as it existed at the relevant time

Order was modified by the Appellate Tribunal accordingly.